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In a globally competitive scenario, operational and logistics efficiency determines the location and movement of goods. Freight and logistics networks are realigning according to the location of production and consumption activities, creating the hub-and-spoke models that are needed to improve freight and logistics performance.

LOGISTICS SECTOR IN INDIA

Logistics is regarded as the backbone of the economy, providing efficient and cost-effective flow of goods on which other commercial sectors depend upon. As per the Economic Survey 2017-18, India’s logistics industry which is worth around USD 160 billion is likely to touch USD 215 billion in the next two years. The sector provides employment to more than 22 million people has grown at a compound annual growth rate (CAGR) of 7.8 per cent during the last five years and will grow at a CAGR of 10.5 per cent over the next 5 years.

The e-commerce retail logistics market is valued at $35 billion in 2018, and is projected to witness a growth of 36 per cent in the coming five years.

To a large extent, the logistics sector in India remains unorganised, the industry is facing challenges such as high cost of logistics impacting competitiveness in domestic and global market, underdeveloped material handling infrastructure, fragmented warehousing and lack of seamless movement of goods across modes, among others.

The need for integrated Logistics sector development has been felt for quite some time in view of the fact that the logistics cost in India is very high compared to developed countries. High logistics cost reduces the competitiveness of Indian goods both in domestic as well as export market. Development of logistics would give a boost to both domestic and external demand thereby encouraging manufacturing and 'job creation'. This will in turn be instrumental in improving country's GDP.

In November 2017, the government granted infrastructure status to logistics sector (including cold chain and warehousing facilities). The grant of infrastructure status allows the logistics companies get access to more economical loans under favourable terms.

IMPROVING INDIA'S GLOBAL LINKAGES

In 2017, India’s logistics performance improved from 54 to 35 under World Bank Logistics Performance Index (LPI). The government expects the Indian logistics sector to grow to $360 billion by 2032 from the current $115 billion.

Increasing globalization of Indian economy, coupled with renewed manufacturing vigour attributed to Make in India Campaign, and growth of e-commerce business all forecast rapid growth in Indian logistics sector. It is important to focus on new technology, improved investment, skilling, removing bottlenecks, improving inter modal transportation, automation, single window system for giving clearances, and simplifying processes.